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Ben Davies: Revolting PIIGS -- a golden hope?

Section: Daily Dispatches

11:53p HKT Monday, June 25, 2012

Dear Friend of GATA and Gold:

Classifying gold held by smaller commercial banks as a zero-risk-weighted asset, an asset as good as cash and government bonds, might do as much for gold in coming years as the change of central banks from net sellers to net buyers, Hinde Capital CEO Ben Davies writes. (Davies notes that this must not be confused with the liability side of the equation that Tier 1 capital addresses. Gold on the liability side would be classified as a currency deposit in the same way as a cash deposit, which is stated on the liability side of a bank's balance sheet -- that is, a form of debt.)

Of course the impact well might depend on the form of gold claimed to be owned by banks. Real metal in their vaults, unencumbered, might be one thing. Shares of GLD, shorted and rehypothecated six ways to Sunday, might be another.

Gold's optimists might like to see the reclassification scheme as a sneaky way of recapitalizing banks suddenly upon a big official upward revaluation of gold, with central bankers hinting to their kinfolk in commercial banks that they might front-run central bank buying (or rather revaluation) just as they have been encouraged to front-run central bank selling.

Gold's pessimists might ask why anyone should believe a bank's balance sheet anymore whether it claims to include gold or not. After all, who is really going to audit commercial bank gold -- the guys who audit the GLD vault, where CNBC reporter Bob Pisani was invited to display to his audience a GLD bar that turned out to belong to a different exchange-traded fund? And which government regulatory agency hasn't already been fully discredited in the age of Enron, MF Global, Northern Rock, Royal Bank of Scotland, and a dozen other financial scandals?

In any case Davies' commentary is titled "Revolting PIIGs -- a Golden Hope?" and it's posted at the Hinde Capital blog here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit:

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Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment:
38% Pre-Tax IRR, $3.0 Billion NPV, and a 37-Year Mine Life

Company Press Release

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory.

The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57.

The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows:

Payback period: 3.55 years
Initial capital investment: $863 million
IRR pre-tax (100% equity): 38 percent
NPV pre-tax (8% discount): $3 billion
Mine life: 37 years
Total mill feed: 405.3 million tonnes
Mill throughput: 32,000 tonnes per day

Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics."

For the complete press release, please visit: